Good Time to Buy?

And the hits just keep coming …

Was it someone at Motown who came up with that line, or was it a radio disc jockey? Either way, the phrase certainly sums up 2020 for a lot of people. The year hit like a boxer or MMA (mixed martial arts) fighter, slamming health and finances in ways many have never seen in their lifetime.

I had to go out yesterday and I was shocked at the new developments being built in what seems like every nook and cranny. Rumor has it that a shopping complex is coming to my neighborhood (all I could think about was the increase in traffic … good for some businesses I suppose but that one traffic light is already a nightmare) and several other spots I passed are sporting new homes, with signs brightly suggesting that now is a good time to give up the rent contract and buy.

The pandemic and other national and global issues (technology breaches, U.S. elections, anyone?) have caused many swings in the market and in people’s minds. Since we’re friends, I’ll let you in on a little secret: I started checking out properties in Costa Rica. Seriously. I mean, have you seen the views from some of the villas — I could be lounging by the pool whilst looking at the ocean as breezes blow gently through the foliage and monkeys scamper through the trees, sipping from fresh springs flowing down from the mountains that ring my multi-acre estate. And all for the price of a fraction of the property I own now. No, really.

I count myself in the group of fortunate people who can even consider selling their property to move somewhere else. Early in the days of the pandemic, businesses were shuttering and people were out of work. Unemployment benefits, a temporary stop-gap, is usually not enough. According to CNBC, those receiving such benefits will receive an increase and will be allowed to collect for a total of 50 weeks. The Centers for Disease Control also stepped in to ask landlords not to evict renters who’ve fallen behind on payments, but many indicate that unemployment hasn’t been enough to avoid eviction or foreclosure. According to the Census Bureau, 35% of the population is struggling to pay bills right now.

It’s been said that it’s often cheaper to buy than to rent. I’ve owned three homes in my life so far and rented five (three homes and two apartments). My mortgages were certainly nicer to my pocket than rent. Plus, I’m able to have pets as a homeowner, and yelling ‘Get off my lawn’ feels like it carries more weight, since I own the place, right?

But there’s still the question: is it a good time to buy, especially for folks who’ve had some challenges during the pandemic due to reduced work hours, eliminated jobs, or past due rent?

The answer might not be so simple as yes or no.

Back in September, Forbes reported it was a terrible time to buy property, suggesting it was a seller’s market. In early December, the forecast was pretty similar.

But the outlook isn’t totally bleak. Several mortgage giants like Fannie Mae have responded to the pandemic by eliminating certain fees and not enacting foreclosure processes. There are reports that the federal government might cut mortgage rates.

So all that is great news!

However, there are some things to keep in mind before jumping into the deep end of the house-buying pool. I’ve done that and while I was able to get what I thought was the house of my dreams, I could have been a lot wiser through the process.

One thing I didn’t do the first time around was to use a good mortgage calculator. If you aren’t familiar. there are a bunch of different ones and it’s always good to check several angles before approaching a seller or agent.

In my case, I wish I’d checked my debt-to-income ratios, identified how much house I could afford, double-checked if I was better off renting than buying at the times I was looking and in the areas I was hunting for, and even identifying how quickly I could pay off my home loan with regular and extra payments.

At the time of my first home purchase back in the mid-1990s, assessing those things would have meant a lot of work. And math. Have I mentioned how much I am not a fan of math? However, there are some great mortgage calculators out there where you can find all these tools and more in one place. I was checking out MortgageCalculators.info (yes, that’s easy to remember, isn’t it?) and was so surprised to see that even without logging in, I could check interest rates in my area as well as connect to lenders. All that in addition to letting someone else do the math!

Bottom line is, the answer to whether it’s a good time to buy a home is it depends. It’s all about what each person’s bandwidth is right now, and the only way to get an idea is to start asking the right questions. The mortgage calculator is a great way to understand what’s out there.

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